South African trade unions said on Tuesday that they would lodge a formal dispute if the government doesn't honour a three-year public-sector wage deal, a step that could lead to months of arbitration and culminate in a strike.

Unions are in a militant mood after government officials said last week that they couldn't afford to pay public servants wage increases due in April and asked to renegotiate the deal struck in 2018.

Finance Minister Tito Mboweni said in his annual budget speech that he wanted to make R160-billion of cuts to the public-sector wage bill over the next three years.

Nehawu, one of the largest public sector unions, said it had rejected government's request to review the wage deal and that it did not intend to discuss it further.

"On April 1, if there is no implementation we will file a dispute and enforce the agreement," Nehawu spokesperson Khaya Xaba said.

Trade union federation Fedusa echoed that view. "We are going to be declaring a dispute ... we don't want to open any discussions on a matter that was settled in June 2018 already," General Secretary Riefdah Ajam told Reuters.

If unions file a dispute, then the matter must be submitted for conciliation within 30 days. If the conciliation fails, it will head to arbitration and could end in a strike that cripples schools, hospitals and police stations.

Vukani Mbhele, a spokesperson for the Department of Public Service and Administration, said the ministry was talking to unions informally.

He said unions hadn't told the ministry about their plans to lodge a dispute and that officials would deal with the matter when it arises at the Public Service Coordinating Bargaining Council.

The fight over public-sector wages has big political and economic implications for South Africa. Some unions are important allies of President Cyril Ramaphosa's governing African National Congress.

Ramaphosa is battling to preserve the country's last investment-grade credit rating, from Moody's, which is scheduled to review that rating later this month.

On Monday, Ramaphosa signalled his support for curbing the public-sector wage bill.

Economists have long argued that the government should take a tougher line with unions over public-sector wages, which account for around a third of state spending.